Velcro too sticky for its own good

Velcro has a problem. It's so famous and popular that its name has turned into an everyday word.

That's a problem that many start-ups would love to have. Companies have lots to gain when their names become terms for concepts such as search, teleconferencing and shipping.

Yet, it's possible to have too much of a good thing. When a brand name grows to be so pervasive that it's the only generic word for the product, it can't be a registered trademark any more. There's even a legal term for this form of trademark death, which is - I kid you not - "genericide".

Trademarks allow companies to file lawsuits against anyone who uses their names in ways that might create confusion in the marketplace.

From a theoretical market design perspective then, wiping out trademark protection for names that enter everyday language makes sense: If "xerox" were to become the universal word for photocopying, then Epson would have to call its photocopiers "xerox machines" in order to sell them.

If Xerox could then enforce its trademark against Epson - seeking damages or injunctions against the sale of Epson's photocopiers simply for using the term "xerox"- that would hurt competition in the photocopier market.

Thus, in practice, once a brand name becomes a generic term, it can't be a trademark. That's what happened with aspirin, escalators and yo-yos.

This creates some funny incentives. Early on, you want nothing more than for your company name to achieve enough fame to become a verb. But succeed spectacularly enough, and then - whoops! - you really, really want to get people to start using the generic term.

So what's a brand on the brink of genericide to do? Advertise the generic term for its product, of course! Watching a well-known brand advertise its product's not-so-well-known generic name sounds like it should be hilarious - and it is. Xerox famously ran an ad campaign proclaiming: "When you use 'Xerox' the way you use 'aspirin', we get a headache."

The Dow Chemical Company, which makes a well-known "line of extruded polystyrene foam products", has worked hard to remind us that coffee cups aren't actually made of Styrofoam.

And what about Velcro? It recently released a music video, Don't Say Velcro, which reminds us that the correct term for an off-brand Velcro-like fastener system is "hook and loop". The video is not only office-themed, but apparently actually features at least a couple of Velcro's own lawyers. And it has a hook that's so good that you might want to play it (sigh) on loop.

As an economist, it warms my heart to see companies responding to incentives in new and creative ways. Trademark-themed music videos, in particular, seem like they would be a great trend.

That said, if you're at the point when you have to defend your trademark with viral videos, it's likely that you've been making money for years off the fact that people look for your product even when somebody else's would do.

That's probably been good for your bottom line, but it might not have been good for consumers. And it means that in trademark terms, you may already be stuck.

BLOOMBERG VIEW

•The author is an associate professor at Harvard Business School and Harvard's Department of Economics.

A version of this article appeared in the print edition of The Straits Times on October 26, 2017, with the headline 'Velcro too sticky for its own good'. Print Edition | Subscribe